REC LTD LAUNCH PUBLIC ISSUE OF SECURED REDEEMABLE NCB OF RS 4500CR

December 4, 2012

Posted by sagarmedia

Rural Electrification Corp. Ltd. to launch the Public Issue of Tax Free Secured Redeemable Non-convertible Bonds upto the shelf limit of Rs. 4,500 crores

New Delhi, 03rd December 2012: Rural Electrification Corporation Limited (“REC” / the “Issuer” / the “Company”) (NSE: RECLTD, BSE: 532955), is one of only 16 public sector undertakings to be granted “NAVRATNA” status by the Department of Public Enterprise . REC is engaged in the financing and promotion of Power Generation, Transmission and Distribution including renewable energy projects throughout India. REC has been authorized by the CBDT notification dated November 6, 2012 and corrigendum thereof dated November 15, 2012 (“Notification”) to raise funds upto Rs. 5,000 crores through Issue of Tax Free Bonds. REC has filed the Shelf Prospectus dated November 26, 2012 and Prospectus Tranche-1 dated November 26, 2012 (together referred as the “Prospectus”) with the Stock Exchanges, Registrar of Companies and the SEBI. The Issue size under Tranche-1 Issue stands at an aggregate of Rs. 1,000 crore with an option to retain oversubscription upto the shelf limit (i.e. upto Rs. 4,500 crores). These secured, redeemable and non-convertible bonds are of face value Rs. 1,000 (“Issue”) each in the nature of debentures having tax benefits under Section 10 (15) (iv) (h) of the Income Tax Act, 1961, as amended.

These bonds being offered, as part of Tranche- 1 shall bear a fixed rate of interest and are under two Series – Series 1 and Series 2 having tenure of 10 and 15 years respectively. For all the categories, the coupon rates for the Tranche 1 Series 1 and Tranche 1 Series 2 stand at 7.22% p.a. and 7.38% p.a. respectively. However, an additional interest at the rate of 0.50% p.a. shall be payable to Category IV investors for the Tranche 1 Series 1 and Tranche 1 Series 2 respectively (Retail Individual Investors; those applying for an amount aggregating upto and including Rs. 10 lacs across all Series in Tranche-1 Issue). In case the Bonds held by the original allottees under Category IV Portion are sold/ transferred (except in case of transfer of Bonds to legal heir in the event of death of the original allottee), the coupon rate shall stand revised to the coupon rate applicable for allottees falling under Category I, Category II and Category III Portion.

The Bonds proposed to be issued under this Issue have been assigned the ratings- ‘CRISIL AAA/Stable’ by CRISIL, ‘CARE AAA’ by CARE, ‘IND AAA’ by IRRPL and ‘[ICRA] AAA’ by ICRA Ltd. The rating of the Bonds by CRISIL, CARE and ICRA are considered to have the highest degree of safety regarding timely servicing of financial obligations. The rating of the Bonds by IRRPL denotes the highest rating assigned in

its national rating scale. This rating is assigned to the “best” credit risk relative to all other issuers or issues in the country. The Bonds offered through this Issue are proposed to be listed on the NSE and the BSE.

The Issue shall remain open from December 3, 2012 to December 10, 2012 with an option for early closure subject to the Issue being open for a minimum of 3 days and Category IV portion being fully subscribed, as may be decided by the Board of Directors or the Bond Committee. In the event of such early closure of the subscription list of the Issue, the Company shall ensure that public notice of such early closure is published on or before the day of such early date of closure as the case may be, through advertisement/s in at least one leading national daily newspaper.

The funds raised through this Issue will be utilized towards general lending operations of the Company and other associated business objectives and to discharge existing debt obligations which were generally undertaken for business operations.

A.K. Capital Services Limited, Enam Securities Private Ltd., ICICI Securities Ltd., Kotak Mahindra Capital Company Ltd. and SBI Capital Markets Limited are the Lead Managers to the Issue. Additionally, SBICAP Trustee Company Ltd. and Karvy Computershare Pvt. Ltd. are the Trustee for the Bondholders and Registrar to the Issue respectively.

About Rural Electrification Corporation Limited

REC is a Non Banking Financial Company (NBFC) – Infrastructure Finance Company (IFC) in the Indian power infrastructure sector which commenced operations in 1969 for the purpose of developing the power infrastructure in rural areas. REC is one of only 16 Indian public sector undertakings to be granted “Navratna” status by the Department of Public Enterprise by virtue of our operational efficiency and financial strength.

REC is a listed Public Sector Enterprise and a Government of India (GoI) undertaking with a standalone net worth of Rs. 14,745 crores as on March 31, 2012. REC is engaged in the financing and promotion of transmission, distribution and generation including renewable energy projects throughout India. REC services its clients through a network of 18 project offices and 2 sub offices spread across India.

On the financial front, the standalone total revenue and net profit for the year ended March 31, 2012 stood at Rs. 10,509 crores and Rs. 2,817 crores respectively. The standalone total loan assets (gross) as on March 31, 2012 stood at Rs. 101,426 crores while its standalone net worth stood at Rs. 14,745 crores as on March 31, 2012.

For the year ended March 31, 2012, the Company sanctioned Rs. 51,297 crores of loans, including Rs. 23,177 crores relating to generation projects, Rs. 23,540 crores relating to transmission and distribution projects and Rs. 4,580 crores under short-term loans. For the year ended March 31 2012, the Company disbursed Rs. 27,820 crores of loans, including Rs. 12,349 crores relating to generation projects, Rs. 11,711 crores relating to transmission and distribution projects and Rs. 3,760 crores under short-term loans.

For further details, please contact;

Naresh Sharma

Concept Public Relations